NetScout to Merge With Danaher Unit in $2.6 Billion DealCécile Daurat
NetScout Systems Inc. agreed to merge with the communications unit of Danaher Corp. in a $2.6 billion deal, creating a larger provider of tools that test networks and help protect corporations from security threats.
Danaher shareholders will get about 60 percent of NetScout’s outstanding shares at the closing of the tax-free transaction, according to a statement. NetScout Chief Executive Officer Anil Singhal, who more than owns 5 percent of the company he co-founded, will lead the combined business.
NetScout will broaden its customer base with Danaher businesses such as Arbor Networks, whose security products help prevent cyber threats, and Tektronix Communications, a provider of support for communications services. The new company, with revenue of about $1.2 billion, will also include certain parts of network monitoring-unit Fluke Networks.
Danaher, a Washington-based manufacturer of dental equipment and water filters, will create a wholly-owned subsidiary to hold the communications business and distribute ownership of that subsidiary to shareholders in either a spinoff or splitoff.
If Danaher elects a spinoff, shareholders will participate pro-rata. If it’s a splitoff, they will have the opportunity to exchange their Danaher shares for shares of the communications subsidiary.
James Lico, Danaher’s executive vice president, will join the board of Westford, Massachusetts-based NetScout upon completion of the deal, bringing the number of directors to eight.
The transaction is expected to close in the first half of NetScout’s fiscal year 2016. Danaher shareholders will receive about 62.5 million shares of NetScout common stock. The deal’s value is based on NetScout’s closing of $41.91 on Oct. 10.
NetScout rose 6.7 percent to $44.72 at 9:32 a.m. New York time, while Danaher advanced 1.2 percent to $72.70. NetScout’s shares had jumped 42 percent this year through Oct. 10, the most recent trading day, while Danaher dropped 6.9 percent.